Gemfields Owner Reduces Staff, Salaries

RAPAPORT... Colored-gemstone producer Gemfields is taking measures to reduce debt and revive profit growth, following its acquisition by Pallinghurst Resources earlier this year.

Gemfields’ debt grew almost fivefold to about $84 million between
2014 and July 2017 when Pallinghurst acquired the colored-gemstone producer, the parent company explained in a statement. To improve efficiency, Pallinghurst and Gemfields
have reduced staff numbers at the administrative head office by about 15%, and
implemented “staff rationalization” at the New York and India bases.

The company moved its New York marketing function to London
in September as part of attempts to restructure and streamline operations,
resulting in a small number of layoffs.

Pallinghurst has made changes to its senior leadership
and their remuneration, enabling a 50% reduction in total compensation to the
executive management team, it explained. The company has also
reorganized certain structures at Gemfields, with employees now reporting to an
executive based in the same country rather than someone elsewhere in the same
discipline.

Aiming to lift sales value, Gemfields has shifted focus to
extracting “premium” emeralds at its Kagem mine in Zambia. Revenue slumped by
$54 million in the fiscal year ending June 2017 due to a drop in recovery of
these high-end stones, Pallinghurst noted.

“Whilst it is too early yet to make firm forecasts, the
initial results have been very positive, with strongly improved premium
production in the last three months, particularly in November,” the group said.

The company has also started the reopening process for the
Mbuva-Chibolele mining pit, located near the Kagem deposit. It expects to
achieve initial production of goods from that area in the first quarter of
2018.